HUF income attribution for karta remuneration upheld where family funds generated the earning and personal service was secondary.

Where remuneration received by a karta is attributable to the investment of Hindu undivided family funds, it is taxable as family income even if personal service also contributes. The Delhi HC noted that the company was floated with family funds, the karta contributed nothing personally, and the remuneration had consistently been treated as family income. Applying the principle that income earned with the aid of family assets belongs to the HUF, the remuneration was assessable in the hands of the assessee-HUF and the reference was answered in favour of the Revenue.

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Issues: Whether remuneration received by the karta of a Hindu undivided family from a company, in which the family funds were invested, was assessable as the income of the Hindu undivided family.

Analysis: The remuneration was found to have arisen from the investment of family funds, the company was floated with those funds, the karta contributed nothing personally, and the remuneration had consistently been treated as family income. The governing principle is that where income earned by a member of a Hindu undivided family is attributable to family funds or is earned with the aid of those funds, it is taxable in the hands of the family even if personal service also plays some part.

Conclusion: The remuneration was assessable in the hands of the assessee-Hindu undivided family, and the reference was answered in favour of the Revenue.

Ratio Decidendi: Income received by a member of a Hindu undivided family is assessable as family income where it is earned by detriment to the family funds or with the aid or assistance of those funds, notwithstanding an element of personal exertion.

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